Soybean oil prices rallied today after the WASDE report was released showing lower soybean yields and a reduced carryout for the 20/21 crop year. October futures settled at 33.61/lb, up just over a ½ cent from yesterday’s close. The October heating oil contract was relatively steady with yesterday’s close at $1.0896. While the higher bean oil prices are supportive of higher animal fat prices into the biodiesel sector, the flat heating oil market and recent downturn will do little to incentivize the biodiesel market to pay higher prices.

Corn prices at the CME also moved higher on a production cut in today’s report. December futures were up 3.5 cents, settling at $3.6850/bu. At 400 percent of the price corn, a 3.5 cent increase in corn prices translates into an added ¼ cent value to the feed fat market.

Countering the upward pressure in the market via the SBO and corn markets is the supply. Hog slaughter is estimated at 2.34 million head this week with…